EU clears BASF's acquisition of Solvay's polyamide business

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Photo by BASF BASF says the approved deal will achieve its “strategic objectives”

The EU Commission has granted conditional clearance to German chemicals company BASF to acquire Solvay’s polyamide (PA) business.

In a statement on 18 Jan, the European Commission said the approval was conditional on the “divestiture of a remedy package”.

"Our decision will allow for the creation of a significant European player in this market because the commitments offered by BASF and Solvay ensure that the merger will not lead to higher prices or less choice for European businesses and, ultimately, consumers," said commissioner Margrethe Vestager, in charge of competition policy.

The decision followed an in-depth review of the proposed transaction by the EU, which had expressed its concerns about a monopoly over the supply of certain key materials, including adiponitrile (AND), hexamethylene diamine, adipic acid, hexamethylenediamine adipate salt, and PA 6/6 base polymer in the European Economic Area (EEA).

The Commission was also concerned that the acquisition would lead to a “reduction of the number of suitable suppliers and likely price increases” in a number of markets related to the polyamide industry in the region.

Such markets include adiponitrile (AND), a key upstream input for the PA 6/6 value chain, as well as other key materials such as hexamethylene diamine, adipic acid, hexamethylenediamine adipate salt, PA 6/6 base polymer, PA 6/6 engineering plastics and PA6 3D printing powder.

To address the Commission's concerns, BASF and Solvay pledged to divest Solvay’s facilities at Belle-Etoile and Valence in France, Gorzow in Poland, and Blanes in Spain, to “a single suitable buyer”. These facilities produce hexamethylene diamine, hexamethylenediamine adipate salt, PA 6/6 base polymer, PA 6/6 engineering plastics and PA6 3D printing powder.

Additionally, a production joint venture would be created in Chalampé, France, between the merged entity and the buyer of the divested assets, for the production of adipic acid.

BASF also undertook to provide long-term supply agreements for ADN to meet the divestment business' requirements.

These commitments, said the EU, “fully remove the overlap between BASF and Solvay in the markets where the Commission had identified competition concerns.”

In a statement on the clearance, BASF said the approval was “an important milestone for the transaction”.

The deal is now expected to close in the second half of 2019 after all remaining closing conditions, including the sale of a remedy package to a third party, have been fulfilled.

However, pending approval of the transaction, the first steps in the divestment process had already been taken in the fourth quarter of 2018, BASF said.

The polyamide businesses to be acquired in the Americas and in Asia are not affected by the commitments.

BASF said the approved deal will achieve its “strategic objectives” to strengthen its PA6/6 business significantly.

“The acquisition will complement BASF’s engineering plastics portfolio, enhance the access to key growth markets in Asia and South America as well as strengthen the value chain through backward integration into key raw materials such as ADN (adipodinitrile),” the company added.

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